Retirement is supposed to be a time to enjoy your family and pursue the passions that you couldn’t in your working years. Unfortunately, many retirees struggle financially because they either failed to plan ahead or aren’t using efficient strategies to minimize taxes and maximize benefits. Retirement planning is incredibly complex and involves a variety of considerations.
These are 5 common mistakes that could make your retirement more difficult than it has to be:
1. Neglecting to Plan: The sooner you start planning for retirement, the better. Retirement planning involves investing, estimating your future living expenses, creating a withdrawal strategy, developing an estate plan, and more.
2. Not Adjusting Investments: When you are younger, you can employ a riskier investment strategy. If the market goes down and you lose some money, you still have plenty of time to build it back up. Older people who are closer to retirement typically don’t have the flexibility to ride out market volatility. If you’re approaching retirement and a significant portion of your money is invested in the market, you should consider meeting with a financial advisor to discuss the right investment allocation for you, which may involve moving some of your funds to more conservative investments.
3. Not Maximizing Tax-Deferred Accounts: Retirement accounts like 401(k)s and IRAs have the ability to invest in a number of market-based investments, which have the potential to produce higher returns than savings accounts, if you’re willing to assume some investment risk. They are also tax-deferred, meaning when you contribute to one of these accounts, you can subtract that amount from your taxable income for the year. You will only be taxed on it when you start making withdrawals (you will likely be in a lower tax bracket at that point).
4. Relying on Social Security Too Much: Social Security is simply not enough for most Americans to get by. If having a steady income in retirement is one of your concerns, you should consider options to supplement your social security. For example, an annuity offers you the opportunity for tax-deferred growth and guaranteed income for the rest of your life.
5. Failing to Consider Health Care and Long Term Care Costs: Health care costs in retirement years can be unpredictable. Many retirees also end up needing long term care including in-home care, assisted living services, and nursing home care. A multi-year stay at a nursing home could really put a dent in your nest egg. Long term care insurance helps many Americans afford these types of end-of-life services without having to drain their savings or ask adult children for help.
When was the last time you assessed your retirement strategy? Are you totally confident that you can retire and live your desired lifestyle without running out of money? Everyone can benefit from professional guidance when it comes to retirement preparation. Absolute Retirement Solutions offers personalized retirement strategies designed to help meet your unique needs.
Contact us today to get in touch with a qualified agent.
Insurance and annuity guarantees are backed by the financial strength and claims-paying ability of the issuing company. They involve limitations, fees and charges including surrender penalties for early withdrawals. Absolute Retirement Solutions does not offer tax, legal or retirement planning services or investment advice.